The Keystone Pipeline is closed after an oil leak, stopping the flow of 600,000 barrels a day

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CNN Business

The Keystone Pipeline has been shut down after a leak was discovered near the border of Kansas and Nebraska.

The shutdown of the major oil pipeline carrying crude from Canada sparked volatility in energy markets on Thursday, with oil prices briefly rising as much as 5% before retreating.

Federal safety officials are investigating the leak and have deployed to the scene, a spokesperson for the Pipeline and Hazardous Materials Safety Administration told CNN.

Canada’s TC Energy (TRP) said it initiated an emergency shutdown of the Keystone Pipeline System at 9pm ET on Wednesday after alarms were triggered and pressure dropped in the system. The company said the system remains shut down as “our crews actively respond and work to contain and recover the oil.”

Calgary-based TC Energy said there has been a “confirmed release of oil” in a creek located about 20 miles south of Steele City, Nebraska. An estimated 14,000 barrels of oil have been released late Thursday, the company said.

PHMSA, an arm of the Transportation Department responsible for enforcing pipeline safety regulations, said the leak is located near Washington, Kansas, which is close to the Nebraska border.

The spokesman said the agency continues to investigate the cause of the leak.

US oil prices climbed as high as $75.44 a barrel on the news, before easing. In recent trading, oil rose 0.8% to $72.57 a barrel. The gains follow a steep selloff in recent days that sent crude to levels not seen since December 2021.

No timetable has been given to restart the Keystone Pipeline, a 2,700-mile system that delivers mostly Canadian oil to major refineries across America. The pipeline can transport more than 600,000 barrels of oil per day.

Matt Smith, an analyst at commodity data provider Kpler, said Canadian oil normally transported by Keystone cannot be easily replaced.

“We’re seeing an increase in prices because this will affect refineries that take this crude,” Smith said.

“Our primary focus right now is the health and safety of employees and personnel on site, the surrounding community, and mitigating risk to the environment through the deployment of bilges downstream while we work to contain and prevent further migration of the spill,” TC Energy said in a statement.

The leak occurred on an existing Keystone pipeline that is separate from Keystone XL, a controversial pipeline project that ended last year after President Joe Biden revoked the pipeline’s permit on his first day in office.

The Keystone Pipeline has experienced leaks in the past, including one in South Dakota in 2016 and another in 2019 in North Dakota that affected nearly five acres.

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